A third of the labor-participation rate drop is reversible, IMF says

It’s a much-discussed element of the jobs market — the precipitous decline in labor-force participation. The percentage of the U.S. population in the workforce has dropped by 3 percentage points since the Great Recession, reversing half of the gains between 1960 and 2000, according to Ravi Balakrishnan of the International Monetary Fund.

Some of that reflects a big decline in youth participation — and he says that’s not because of an increase in college enrollment, but rather a decline in the number of students who also are working. Rising applications for disability insurance also have played a role. He points out the incidence of disability insurance is highest among the over-50s.

The good news, of sorts, is that one-third of this decline is reversible. About 2 million people may return to the workforce as job prospects improve. However, by 2017, aging will dominate and more than offset this cyclical bounce.